Albertans -- or at least this generation of them -- aren't used to bad economic news.
For the hard-working, truck drivin' oil barons, what passes for bad news are stories about spiralling inflation, worker shortages, supply shortfalls and traffic snarls -- all outcomes of a red-hot economy. It is accepted wisdom that most provinces would trade their worries in a Fort McMurray minute for this western job-mecca's irritations.
Until now.
The latest sign that Alberta has the economic sniffles came in a Calgary headline this week, when a prominent developer announced that -- gasp -- it was actually putting a high-rise condo project on hold because of runaway construction costs.
Resiance Corp. said its Gateway Midtown condo project -- 26- and 30-storey towers planned for the heart of downtown Calgary -- has been iced because of deep concerns about "dramatic escalations in construction costs."
At the same time, homebuilder Jayman MasterBuilt laid off 50 people in its Calgary and Edmonton offices because of the changing housing market.
The shift comes as a shock to a business community that has told itself the trend line would just keep pointing upward. Heady growth projections have led to Alberta's billing as Canada's economic powerhouse, home to refugees from economic train wrecks scattered across the rest of Canada.
Instead, this year, Alberta had its first net outward migration in decades.
The chill is less of a surprise to consumers, who have sensed -- perhaps even wished for -- a cooling off for months. A survey conducted for accountants Pricewaterhouse-Coopers LLP by Leger Marketing in November 2007 found that both consumers and small-business owners were feeling trepidation around future unemployment rates and current business conditions.
Most notable in the November survey was a marked drop in confidence about employment. This followed speculation on cuts in investment from the oil and gas industry, as well as softening housing starts.
Consumers were least confident about investing in a new house, with almost 60 per cent of the respondents indicating now was a bad time to buy.
At the end of July, MLS sales for single-family homes and condos this year were down nearly one-third from a year ago.
Meanwhile, housing construction starts are expected to reach a mere 16,000 -- the lowest in 12 years, according to Canada Mortgage and Housing Corp. in its latest Housing Market Outlook. And housing starts of all kinds will continue to decline through 2009, CMHC predicts -- from 48,336 in 2007, to 32,750 this year, and 29,000 by the end of 2009.
Some of those fears about slowing oil sands development are coming to fruition.
This month, StatoilHydro ASA, Norway's largest oil company, stated it might postpone the start of an upgrade plant at its Canadian oil sands project for a second time because of rising costs and lack of clarity regarding regulations.
Economists are urging Albertans not to panic. This province has come through a decade of spectacular growth, the kind that most prudent economists have warned all along was unsustainable.
The current downturn is seen as more of a correction than a crash, providing much-needed breathing space for a province choking on its own success.
"We have just come through three of the most unbelievable years ever," says Tom Mauro, founder and chairman of Calgary-based Albi Homes. "At least it was something I haven't seen in my 30 years in the industry. And, you know what? We got used to it."
Albertans have to get used to a little bit less, at least for now. The silver lining is that this case of the sniffles is highly unlikely to turn into a full-blown cold -- not while the oil sands hold the attention of U.S. government and investors.
"The fundamentals of Alberta's and Calgary's economy are still strong," says Todd Hirsch, senior economist with ATB Financial. "The pullback in housing, in retail, in consumer confidence is just part of the natural cycle of things."
Adam Legge, an economist with Calgary Economic Development, says in the long run this cooling off will be seen as a bonus, if it leads to a more sustainable economy, with less rampant inflation.
Most Albertans, exasperated with underdeveloped infrastructure and poor customer service, agree. A little slowdown, it seems, might just make this overheated province a little more livable.
Doug Firby is former editorial pages editor at the Calgary Herald. He is Alberta columnist for Troy Media Corp.
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